Foxtons — one of the UK’s biggest estate agents — issued a profit warning on Monday, saying that it expects year-on-year revenues to be “significantly lower” after Britain voted to leave the European Union on Thursday.
It claimed the uncertainty that plagued the run-up to the referendum was now compounded by a Brexit, and that this would massively impact the property market.
“The run-up to the EU referendum led to significant uncertainty across London residential markets and the decision to leave Europe is expected to prolong that uncertainty,” it said.
“Whilst it is too early to accurately predict how the London property sales market will respond, the upturn we were expecting during the second half of this year is now unlikely to materialise.
“As a result, the challenging conditions we referred to in our April 2016 trading update, which have impacted recent property sales volumes, are now likely to continue for at least the remainder of the year. We therefore expect full year 2016 Group revenues and Adjusted EBITDA [earnings before tax] to be significantly lower than prior year.”
Commenting on the profit warning, CEO Nick Budden also said that the recent hike in buy-to-let stamp duty — a UK tax on home purchases — had not helped, but that the London market would stay strong:
“Whilst we had a strong start to the year, we said in our Q1 update that we expected the first half to be challenging ahead of the EU referendum. Since then recent sales volumes have been slow as uncertainty and higher stamp duty has led many buyers and sellers to sit on their hands. The result of the referendum has increased uncertainty and is likely to mean that these trends continue for at least the remainder of the year.
“Looking further ahead, we remain confident of the attractiveness of London property sales markets and our strategy to focus on the outer London mid-market segment. Furthermore, our strong lettings business provides strong downside protection.”
Despite Foxtons’ profit warning, many property firms are keeping upbeat in the face of a Brexit, saying it could actually stimulate the housing market in the short term thanks to overseas investors taking advantage of the falling pound. Estate agent Knight Frank claimed that “in the short to medium-term, the fundamental demand and supply dynamics in the market are unlikely to change.”
Meanwhile Chancellor George Osborne, who advocated for Britain to stay in the EU before the referendum, broke his silence since the referendum result to say that “Britain is in a position of strength because, over the last six years, we have worked hard to rebuild the British economy,” and that he would make sure Britain did not “close itself off.”
Foxtons’ shares have tanked since the vote, and fell even further this morning on the news of the profit warning: